The Royal Commission into Australia’s banking and financial services industry has highlighted the issues many business owners have faced in recent years — and it isn’t over yet.
But it’s already taught us one thing: if you’re a small business, you might want to think twice about relying solely on the banks that earn billions of dollars a year in profit—especially if it costs you your house or leads to bankruptcy.
The last round of hearings focused on small businesses badly burnt by big banks.
By mid-June, the Royal Commission had attracted some 6,761 submissions, with about 65% of those relating to banks, and small business finance was a major concern.
Small business ombudsman Kate Carnell nailed two major issues when she said two weeks wasn’t enough time to hear all the grievances involving small business and the banks, especially those involving Bankwest and the CBA.
On of top of that, she pointed out a big problem for small businesses is that when things sour with their banks, they often can’t get finance elsewhere.
Others, such as the Council of Small Business Organisations Australia, believe the Royal Commission might have unintended consequences, that the inquiry will lead to tougher lending rules for SMEs.
At Apricity, our belief is that the banks have under-delivered to small business for a long time.
That’s led to a rise in non-bank lenders, which can be a good thing, but SMEs need to make sure they don’t jump from the frying pan into the fire just to secure finance.
Several months ago, the Reserve Bank pointed out there are several innovations with the potential to provide alternative SME lending.
These include the push for comprehensive credit reporting and a shift to open banking—where SMEs and entrepreneurs can share their banking data with third-party providers or lenders—or even alternative finance platforms such as crowd funding platforms.
But the RBA admits such innovations have had limited success or take-up.
We believe that unfair banking practices can seriously hamper innovation in Australia. Apricity is proud of our track record in helping business prosper. Our customers are free to use us as much or as little as they like – and we never slug them with unfair fees or inflexible contract. If you’d like to know more about how we help business grow, please contact us today.
Image borrowed with thanks for the ABC